Arqiva, which recently reached an agreement to acquire BT‘s satellite broadcast business for 25 million British pounds ($47.9 million), hopes the acquisition will provide a springboard to a stronger position in the U.S. market. BT’s Satellite Broadcast Services business currently provides both full-time and occasional-use satellite services from six teleports — three in the United Kingdom, two in the United States and one in France. However, Nick Thompson, managing director of Arqiva’s Satellite Media Solutions division, believes the U.S. market will not be easy for the company to exploit.

“I think the U.S. market will be a challenging one for us,” he said. “Most of the operators are active in the U.S. It is a very different market. It does not have some of the strong drivers that we have here in the U.K., particularly in terms of the U.K.’s DTH platform. We already have a number of major U.S. customers where we are providing aggregation services and collecting content from Europe and transmitting it across to the U.S. and also bringing services from the U.S. into Europe. So, this puts bodies on the ground and gives us facilities in both the East and West coasts, and an ability to look at the market and start to develop it.”

He added “BT’s own business out there has been quite successful in recent years. Inevitably, it will be a hybrid business. It will look at satellite and terrestrial networks combined to give us a sort of hybrid managed-type service offering. So, I think there is a lot of activity and interest out there, and for us we want to rebuild that presence for BT. We have got some tough competition, but we have a very good client base, both in the U.S. and here in Europe.”

Thompson said “it is not just in the U.S. where the company faces a challenging time growing the business. Changing strategies closer to home are also having an impact… I think we face quite a challenge as at least one, and maybe more than one, of the satellite operators are becoming more in direct competition to us. The classic business was traditionally the satellite operator working in harmony with the ground service providers. I think one of those players is looking to become much more competitive in a full end- to-end service provision and as a ground service operator. That is an area of focus from our side. That is a challenge we need to address. We are looking at our options at this stage.”

Thompson believes his company will soon make inroads to Asia, too: “In a year’s time, I hope there would potentially some activity in the Asia Pacific region. There is a gap out there for us in Asia. I hope we would be talking about that next year,” he said.

More Acquisitions To Follow?

The acquisition of BT’s satellite broadcast business is the second major acquisition Arqiva has made in the satellite arena during the last 18 months. In July 2005, the company announced it was spending nearly 70 million British pounds ($138.5 million) to acquire Inmedia, a broadcast and media infrastructure company primarily offering satellite uplinking and related support services using satellite and IP infrastructure to serve broadcast and enterprise markets. Thompson hinted at further acquisitions, saying “we will continue to look at opportunities as they come up. They need to fit our strategy, [but] you will continue to see Arqiva making news over time, and securing acquisitions. There are a number of things going on. But, yes, we are in a growth mode, and long may that continue. Arqiva has a broad range of interests and across that there are many opportunities.”

Thompson noted that the deal for BT was a protracted but significant one, saying “the business has been for sale for a considerable period of time, and that creates a lot of uncertainty in the market. Firstly, subject to approvals, we hope this would put an end to the uncertainty for their customers and their staff. That is a significant point in its own right. It adds for us an international presence and opportunity, which so far we have not had. Most of our business and assets are based in the U.K. Although the nature of the services we provide tend to be international, we obviously have not had a physical presence outside of the U.K. so having a major presence on the continent with some additional people in Italy and Holland, as well two teleports in the U.S., is a big step to growing the business internationally.”

Arqiva is a major player on the broadcast landscape. It provides transmission services for broadcasters, as well as end-to-end media solutions for content and channel providers. With more distribution platforms than ever for content, Thompson believes the company is well positioned to play a key role, and that satellite will remain a vital part of the equation. He said, “I think what is great from Arqiva’s standpoint is we are active in parts of the transition, whether it is terrestrial, mobile, wireless or satellite. We are very happy to see all of those technologies platforms being developed. If you look at satellite and its inherent point-to-multipoint, multicast capability, it continues to remain a very strong platform for the distribution of video or broadband type applications. If you look at the U.K. market, there is a growing subscriber base on DTH. I think in Europe, DTH platforms continue to grow. I think satellite has got a long and successful future ahead of it. That does not mean it will not have competition from competing technologies. We are aware of that and building our business case accordingly.”

Contact, Emma Hutchison, Nelson Bostock (for Arqiva), e-mail, [email protected]